Thursday, March 11, 2010

It looks like a sucker's bet to me...

Mike Walsten points to an account of the "African land grab" in the Observer. I have read similar stories and posted about this, but apparently the speed of this land rush is increasing.

An Observer investigation estimates that up to 50m hectares of land – an area more than double the size of the UK – has been acquired in the last few years or is in the process of being negotiated by governments and wealthy investors working with state subsidies. The data used was collected by Grain, the International Institute for Environment and Development, the International Land Coalition, ActionAid and other non-governmental groups.
The land rush, which is still accelerating, has been triggered by the worldwide food shortages which followed the sharp oil price rises in 2008, growing water shortages and the European Union's insistence that 10% of all transport fuel must come from plant-based biofuels by 2015.
In many areas the deals have led to evictions, civil unrest and complaints of "land grabbing". [More]
Much of the consternation is misguided I think.  I can certainly appreciate the appearance of hungry people exporting food, but this has not been uncommon in world history. At least this kind of commercial colonialism is more productive and less dangerous than say, military adventurism.  Think how much cheaper in lives and dollars if we had simply started buying land in Iraq, sending over young farmers, and employing locals to grow stuff for Mideastern markets.

Look a little longer term.  Let's say these mega-farms prosper, and many locals make decent wages (relatively) and the local economy begins to grow based on selling to these farms.  After all, they can't import everything they need from the home country.  This is not a bad thing for an area that needs development.  Also the presence of such an economic force would tend to mitigate against the sad cycle of tribal warfare and stabilize young democracies by growing the middle class.

Is value being bled from Africa? Absolutely.  But value is being added to Africa many times over.

But here's the clincher. Since few seem to have read the collective history of colonies everywhere, let me predict what will happen. Just like Saudi Arabia, or Brazil, or the US - or any colonial effort anywhere - eventually the locals decide they've had enough and simply nationalize/confiscate the industry.  After all, the land isn't going anywhereI give them a generation, and African countries will be food suppliers to the now agro-colonial powers. 

Ask the "colonizers" at Standard Oil, for example.
Saudi Aramco dates back to May 29, 1933, when the Saudi Arabian government signed a concessionary agreement with Standard Oil of California (Socal), allowing the company to explore Saudi Arabia for oil. Standard Oil of California assigned this concession to a wholly-owned subsidiaryCalifornia-Arabian Standard Oil Co. (Casoc). In 1936 with the company having no success at locating oil, the Texas Oil Company purchased a 50% stake of the concession. called
After a long search for oil that lasted around four years without success, the first success came with the seventh drill site in Dammam, an area located a few miles north of Dhahran in 1938, a well referred to as Dammam number 7. The development of this well, which immediately produced over 1,500 barrels per day (240 m3/d), gave the company confidence to continue and flourish. The company name was changed in 1944 from California-Arabian Standard Oil Company to Arabian American Oil Company (or Aramco). In 1948, Standard Oil of California and the Texas Oil Company were joined as investors by Standard Oil of New Jersey who purchased 30% of the company, and Socony Vacuum who purchased 10% of the company, leaving Standard Oil of California and the Texas Oil Company with equal 30% shares.
In 1950, King Abdul Aziz Ibn Saud threatened to nationalize his country's oil facilities, thus pressuring Aramco to agree to share profits 50/50. A similar process had taken place with American oil companies in Venezuela a few years earlier. The American government granted US Aramco member companies a tax break known as the golden gimmick equivalent to the profits given to Ibn Saud.
In 1973, following US support for Israel during the Yom Kippur War the Saudi Arabian government acquired a 25% share of Aramco, increased the share to 60% by 1974, and finally acquired full control of Aramco by 1980. In November 1988, the company changed its name from Arabian American Oil Company to Saudi Arabian Oil Company (or Saudi Aramco). [More]

Even workers imported from say China will be more "local" than not after enough time.  It's called immigration and examples of its success in abound in your backyard. In fact, there may be some forward thinking African leaders already leaps ahead of the colonizers just making sure the hook gets set firmly.

The bottom line for us may not be the anguish of small farmers being shifted involuntarily to other work, but the idea that lifting them, albeit involuntarily, out of subsistence living starts them on the path to long hoped-for stability and progress.  It may not be perfect during the "colonial" phase, but given time, it will work out pretty well for a large majority, I'll bet.

Finally, this is one reason why I don't bother with the falsely alarmist, and frankly self-promoting cries of "Who will feed the billions and billions in the world tomorrow?" The answer is obvious: emerging waves of farmers of the world.

Maybe it will take longer than I think, but successful "colonizing" efforts, whether political or economic, seem to have one eventual result: independence.

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